Incentive Schemes
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This document presents an overview of incentive schemes, which are programs designed to encourage higher productivity among workers. It describes several common incentive plans, including straight piece-work, Halsey, Rowan, and Emerson plans. Under these plans, standard times and output quotas are set and workers are paid either their normal hourly wage or a bonus depending on whether they meet or exceed productivity standards within the allotted time frame. The document provides examples of how earnings are calculated under each incentive plan based on different productivity scenarios.
Incentive Schemes
- 2. What is incentive schemes? The Incentive Schemes are the programs designed to encourage and motivate workmen for higher efficiency and greater output. According to International Labor Organization (ILO), the incentives are “payment by results”
- 3. TYPES: Halsey Plan Rowan Plan Emerson Plan Straight Piece-Work System
- 4. STRAIGHT PIECE-WORK SYSTEM Definition: The Straight Piece-Work System is the simplest incentive method in which the rate per unit of output is fixed, and the earnings of the worker are computed by multiplying his total output by the rate per unit. • If the per unit rate is 10 Paise and the total output is 1000 units, then his earnings will be 0.10 x 1000 = Rs 100.
- 5. HALSEY PLAN Definition: Under Halsey Plan, the standard time for the completion of a job is fixed and the rate per hour is then determined. • Standard Time: 8 hrs Rate per Hour: Rs. 2 • Case (1): Time Taken = 8 hrs Earnings = 8 x 2 = Rs 16
- 6. • Case (2): Time Taken = 10 hrs Earnings = 10 x 2 = Rs 20 • Case (3): Time Taken= 6 hrs Earnings: Time wages = 6x 2 = Rs 12 Bonus = ½ x 2 x 2 = Rs Rs 2
- 7. ROWAN PLAN Definition: Under Rowan Plan, the standard time for the completion of a job and the rate per hour is fixed. • Standard Time = 8 hrs Rate per hour = Rs 2 • Case (1): Time Taken = 8 hrs Earnings = 8 x 2 = Rs 16
- 8. • Case (2): Time Taken = 10 hrs Earnings = 10 x 2 = Rs 20 • Case (3): Time taken = 6 hrs Earnings: Time Wages = 6 x 2 = Rs 12 Bonus = 2/8 X 6 = Rs 1.5
- 9. EMERSON PLAN Definition: Under Emerson Plan, the standard time for the completion of a task is fixed against which the actual performance of the workers is measured. The worker’s efficiency can be determined by dividing the time taken by the standard time. • Standard output in 10 hrs = 200 units Rate per unit = Rs 2 • Case (1): Output in 10 hrs = 100 units Efficiency = 50% (100/200 x 100) • As efficiency is below 67% the worker is entitled to only time wage, thus, Earnings = 10 x 2 = 20.
- 10. • Case (2): Output in 10 hrs = 200 units Efficiency = 100% (200/200 x 100) • As the efficiency is 100%, then the worker is paid time wages, plus a bonus of 20% on wages earned. Thus, Earnings: Time Wages = 10 x 2 = Rs 20 Bonus = 20/100 x 20 = Rs 4 Total earnings = Rs 24
- 11. • Case (3): Output in 10 hrs = 260 units Efficiency = 130% (260/200 x 100) • For 100% efficiency, the worker will get a bonus of 20% on wages earned, plus one percent additional bonus for every one percent increase in efficiency, i.e. 30%. Thus, the total bonus of 50% of time wage is paid to the worker. • Earnings: Time wages = 10 x 2 = Rs 20 Bonus = 50/100 x 20 = Rs 10 Total Earnings = Rs 30